
doi: 10.2139/ssrn.2793965
handle: 10419/19739
Capital requirements play a key role in the supervision and regulation of banks. The Basel Committee on Banking Supervision is now changing the current framework by introducing risk-sensitive capital charges. There have been concerns that this will unduly increase volatility in the banks' capital. Furthermore, when the credit supply is rationed, capital requirements may exacerbate an economic downturn. We examine the problem of cyclicality in a macroeconomic model which explicitly takes regulatory constraints into account. We find that the capital buffer which banks hold on top of the required minimum plays a crucial role in mitigating the volatility in capital requirements. Therefore, despite the fact that capital charges may vary significantly over time, the effects on the macroeconomy will be moderate.
pro-cyclicality, Konjunktur, regulatory capital, ddc:330, Bankbilanz, economic capital, Eigenkapitalvorschriften, minimum capital requirements,regulatory capital,economic capital,capital buffer,pro-cyclicality,business cycle,bank lending channel, minimum capital requirements, business cycle, Makroökonomischer Einfluß, E44, capital buffer, G21, bank lending channel, Wirtschaftspolitische Wirkungsanalyse, Theorie, E32, jel: jel:E32, jel: jel:E44, jel: jel:G21
pro-cyclicality, Konjunktur, regulatory capital, ddc:330, Bankbilanz, economic capital, Eigenkapitalvorschriften, minimum capital requirements,regulatory capital,economic capital,capital buffer,pro-cyclicality,business cycle,bank lending channel, minimum capital requirements, business cycle, Makroökonomischer Einfluß, E44, capital buffer, G21, bank lending channel, Wirtschaftspolitische Wirkungsanalyse, Theorie, E32, jel: jel:E32, jel: jel:E44, jel: jel:G21
| selected citations These citations are derived from selected sources. This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | 1 | |
| popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network. | Average | |
| influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | Average | |
| impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network. | Average |
